New country, new tax system. Even if taxes aren’t the first thing you think about when moving country, they can become pretty important soon enough. Here is a brief overview of the Dutch tax system in the Netherlands, and how it works.
In what circumstances do I have to pay tax?
In the Netherlands, you have to pay taxes if you earn income while living in the Netherlands. So even if you are temporarily residing in the Netherlands as an expat, if you earn income from abroad, this will have to be declared in the Dutch tax return. Even if you don’t live in the Netherlands but if you work in the Netherlands, you will be taxed.
What kind of taxes are there?
Income tax
The first and most common tax is income tax. This means you declare your income in an annual tax return, which is called ‘aangifte inkomstenbelasting’. The deadline for this tax return is the first of May of the following year. If you are employed by a company, your income tax is automatically withheld from your salary by your employer. This withholding is known as wage tax and is included within payroll tax. However, if you are self-employed in the Netherlands, you are responsible for calculating and paying your income tax through the annual tax return process.
If you need to file a Dutch tax return, the Tax Office will send you a ‘aangiftebrief’, inviting you to file a tax return, for the previous year. If you don’t receive a letter, it is either because you don’t have to file a tax return, or because the Belastingdienst did not think it necessary to complete a form. However, sometimes interesting tax deductions can be applied and save you money, wherefore it is wise to (sometimes) file a tax return on your own initiative. Read more here.
Income tax
Payroll tax, withheld from an employee’s salary by the employer, includes wage tax and national insurance contributions for pensions, unemployment, and other benefits. This monthly deduction saves employees from paying income tax later.
VAT tax
This is known as BTW or omzetbelasting in the Netherlands. All businesses, except certain foundations and associations, must include BTW in their pricing. The three BTW rates are 0%, 9%, and the most common, 21%. The BTW is declared via the ‘BTW aangifte’, which is to be filed each quarter.
Corporate tax
This is called vennootschapsbelasting. This is for businesses that are in the Netherlands and also to those that receive income from the Netherlands and are established abroad. On kvk.nl is a useful income tax calculator, so you can see what the effects of the 2024 have on your income.
Corporate tax
If you live abroad and the testator lived in the Netherlands, this means you have to pay Dutch inheritance tax, by filing an inheritance tax return. The other way round though, no inheritance tax has to be paid in the Netherlands. Read more here.
Corporate tax
If you have to pay gift tax, this will have to be filed in a separate gift tax return. There are many situations however, when you don’t need to pay gift tax. For example, if you receive a gift from abroad, and if the gift is from a non-resident or a resident that has emigrated more than a year ago, no gift tax has to be paid. If the gift is received from a person with the Dutch nationality, different rules apply. Read more here.
Transfer tax
Interestingly, there is no capital gains tax in the Netherlands yet! Transfer tax is also known as overdrachtsbelasting, which has to be paid when you buy a house or a department. Finally there are taxes such as gambling tax, motor vehicle tax and import tax.
Tax help
When you are new in the Netherlands, or your income tax return is more complex if for example you have assets abroad, a house in the Netherlands or you need to file an M-form, it is wise to hire a Dutch tax advisor or tax accountant. We would be happy to help you with your taxes!
If you are thinking about working in the Netherlands, then there are a few things you may need to consider. You may have to request documents to work in the Netherlands, such as a visa or a work permit, depending on a few conditions. You can find the conditions here.
Of course, securing the necessary paperwork is essential, but taxes shouldn’t be forgotten either! If you are planning to work or live in The Netherlands, it is important to seek tax advice in the early stages of your migration. For example, you may be eligible for the 30%-tax ruling. Sometimes this can only be acquired by setting up a Dutch BV, which is the most practical when done before the move.
Working in the Netherlands
If you are working in The Netherlands, and living in a different country, then your taxes can easily become complicated. Usually, the country in which you work and earn your income is the country that is allowed to tax you. Sometimes however, the country in which you reside is allowed to levy income tax. This is only, if the 183-day rule applies in your situation. However, there are 3 conditions which must be met:
The recipient resides in the other country for a duration or durations totalling no more than 183 days within any twelve-month period, starting or ending in the fiscal year in question;
and the remuneration/compensation is not covered by a permanent establishment that the employer maintains in the other State.
And the remuneration/compensation is not covered by a permanent establishment that the employer maintains in the other country.
And the other way round: if you have been only living in The Netherlands and working (from abroad) or for a foreign company, then you should ensure your tax are filed correctly, in order to avoid double taxation!
If you are working in The Netherlands as well as living there it becomes a bit easier, but of course there are still plenty of things to look into, to ensure you are not paying more taxes than needed. It is worth getting your situation looked at, even if it is just to be sure there are no other ways you can save more tax. We can give tax advice on the tax impacts and benefits and of several scenarios, and of course help minimize Dutch tax on your income and assets. We can file your taxes without missing refund opportunities, and of course, negotiate with the Tax Office on your behalf.
Cross-border work can definitely be a challenge, tax-wise. But with Suurmond Taxconsultants at your side, you have your taxes under control!
Are you an expat and are you moving to The Netherlands? Then you might be eligible for the 30%-ruling. Click here to view the requirements. The 30%-ruling has undergone a lot of change this last year.
With the 30%-ruling you can opt for partial non domestic taxation in your tax return.This means you have the advantages of the Dutch tax system. You worldwide net wealth however, remains untaxed and consequently your bank accounts, other investments including property abroad do not need to be mentioned in the tax return. Moreover, you will receive 30% of your salary tax free.
Unfortunately now, the 30% ruling is slowly losing its attraction. Starting from January 1, 2024, the 30% ruling will be modified to a 30/20/10% ruling with a decrease after every 20 months over the maximum duration of 60 months. Moreover the option for partial non-resident taxation will cease as per 1-1-2027 for existing cases and as per 1-1-2025 for tax payers that have been granted the 30% ruling during 2024.
Why does the government want to decrease this favourable ruling?
Extra-territorial expenses generally decrease after the initial immigration was the thought behind this and an advantage that resident tax payers do not have.
So what did the 30%-ruling look like first?
The 30%-rulings that were granted in between 1 January 2012 and 1 January 2019 had a duration of 8 years. Then from 1 January 2019 to 1 January 2024, the applications had a duration of 5 years. Along with this was the exemption from tax on worldwide assets and related unearned income referred to as “partial non-resident tax status”.
What has changed since last year?
Since then, the decision has been made to cut the ruling back. For the expats who fall under the ‘old’ 30%-ruling: they can only opt for partial non domestic taxation until 1-1-2027.
And from 1 January 2024, for the expats that have newly acquired the 30%-ruling the compensation is a tax free salary component of 30% for the first 20 months. After these months, you will be able to receive 20% of your salary tax-free. Then, after this follows another 20 months where your allowance will decrease to 10%. In addition the partial non-resident tax status is only applicable for 2024.
Also, as of 1 January 2024 the maximum salary to gain the 30%-ruling has been set at €233,000 per year. A higher salary will remain fully taxable at the marginal tax rate of 49,5%.If you compare this to the former 30%-ruling, you can sure understand that moving to The Netherlands is less attractive as an expat. We are hoping members from parliament will also realize this and re-instate the full benefits of the ruling.
What are future prospects like for expats moving to Holland?
If you compare this to the former 30%-ruling, you can sure understand that moving to The Netherlands from a financial and tax point of view is less attractive as an expat. Obviously there are many other reasons why The Netherlands may still be the country where you wish to reside.
Parliament is slowly realising this wasn’t a good move for The Netherlands. As it is less attractive for expats to move to The Netherlands, they are now trying to think of alternative ways that make moving to Holland more attractive for highly skilled migrants. In addition there is concern for multinationals leaving The Netherlands as recruiting foreign expertise – that is so needed – becomes exceedingly difficult. We are hoping that government will re-instate the full benefits of the ruling.
Unfortunately, the M form is susceptible to a wide variety of possible mistakes. There are several reasons why these mistakes are made, not taking into account the many questions that need to be answered, often by expats who have only just moved to the Netherlands and need to file their M-form.
1. M form not automatically received
Often, expats who move to the Netherlands don’t automatically receive an M-form. It is often unknown to expats that they need to file the migration form, so it is not uncommon that the P-form (for regular resident taxation) is filed instead of the M form, or no form is filed at all. If you aren’t sure whether to submit the migration form, then please contact us.
2. Refund potential
If you moved to the Netherlands and were employed part of the year, your employer will have taxed you monthly as if you were employed for the whole year. Therefore, a refund resulting from the migration form is not uncommon, depending on your situation. Feel free to contact us and we will check the refund potential in your situation.
3. Language
The M form is only available in Dutch. This adds another level of difficulty to the already extensive and complicated tax return. With google translate, or with help of a friend, it is possible to file it yourself if you do not know the Dutch language. However, mistakes are easily made. Many expats try themselves and find out later that they made a mistake, and consequently the tax return needs to be corrected.
4. Software
Nowadays, the M form can be submitted using the Mijn Belastingdienst website. However, when completing the tax return on Mijn Belastingdienst, the due amount or refund is not calculated. This means you could wait months before you know what the outcome of the tax return is. We file the tax return with our own software which directly calculates what you are entitled to, and therefore provides immediate clarity in regard to your tax liability.
5. Pre-filled information
The pre-filled information in the tax return often contains items that should not be declared in your tax return or does not contain items that should be declared. Therefore, it is very important to check whether you are filling your tax return correctly. Feel free to contact us if you are unsure.
It’s that time again: the Dutch tax return for 2023 can be filed again! For many expats residing in the Netherlands, completing their tax return seems an easy job, due to the pre-filled data in the tax return. However, these pre-filled data are often incomplete or even incorrect. It is important to always check these thoroughly and change or adapt the details if necessary. Here are some key points to keep in mind for your tax return 2023 Netherlands.
International
For example, if you have assets abroad, there is a possibility that this information is not included in the pre-filled return. Or perhaps you lived abroad for a part of 2023. In this case, an M-form must be completed. It is easy to overlook tax benefits and optimisation opportunities in this tax return. Did you have a foreign employer and did you travel back and forth for your job? Then it is important to ensure that the 183-day rule is correctly applied in your situation and that you do not pay double tax.
Especially if you have international aspects in your situation, it is wise to have a tax advisor take care of the tax return 2023 who has experience with cross-border situations.
Tax interest rate increased
Whether you have international aspects to your tax return or not; it is wise to request a provisional assessment if you are expecting to pay a large due amount. This prevents tax interest being due; this is particularly important because a high tax interest rate of 7,5% will apply as of July 1st 2024.
We can assist you and request a provisional assessment on your behalf.
Foreign bank accounts in pre-filled returns
Is there a foreign account visible in your pre-filled return? The balance of foreign accounts is usually not visible in pre-filled returns. If an amount was present in the account in the last 12 years and this has not been included in your box 3 assets previously, it is wise to correct this on your own initiative. If you do not declare foreign assets, you risk a fine that can amount to 300%. Contact us and describe your situation – we will be happy to help.
Minimize wealth tax Netherlands
Once your 30% ruling terminates, you’ll be subject to regular Dutch taxation on your global wealth (Box 3 tax), which means declaring it correctly in your tax return is necessary, to avoid hefty penalties.
30 % ruling and forgot to opt for non-domestic taxation?
If you have the 30% ruling as an expat in the Netherlands, then you don’t need to declare your foreign assets. However, there have been some changes as to the 30%-ruling. This favourable ruling has been further restricted, being decided just before the elections end of last year.
The partial non-resident tax liability in combination with the 30% ruling is no longer possible. Existing 30% rulings are subject to transitional provisions, allowing the partial non-resident tax liability to remain possible until 2026. Additionally, the percentage of income benefit is being phased out. Starting from January 1st 2024, for 20 months, 30% of the salary remains tax-free. For the subsequent 20 months, a percentage of 20% is tax-free, and for the following 20 months, 10% is tax-free. For existing cases as of January 1, 2024, the old rule remains in force for the entire duration.
Be ahead and contact us on time about your tax return 2023 Netherlands! Get in touch today.
If the Tax Office issues you with a tax form or letter to request you to do so, this will have to be filed in any case. If you do not receive a letter, but you have to pay additional tax on your income or assets, you are also obliged to file a tax return. Obviously if you are entitled to a refund, it is in your own interest to file one. For a regular domestic tax return the deadline is May 1st. For a migration tax return (M-form) the deadline is July 1st. For both forms extension can be requested.
This year again we have heard of tax payers who received a letter from the Dutch tax authorities mentioning that they did not need to submit a tax return, although in their particular situation it would have been either mandatory to file a tax return, or they were entitled to a refund. Particularly the situation of someone living abroad owning Dutch real estate, we regularly see that no tax returns were issued or filed. As property is always taxable in the country where it is located, it is important that a tax return is filed, also in view of avoiding later corrections with penalties and interest. Furthermore the Tax Office in the main is not aware of your possible tax deductions. We therefore advise to have your refund possibilities checked.
The Tax Office has also mentioned that some details in the prefilled tax return may be incorrect, such as the life annuity premiums. It is always important to check the figures with the underlying documents. By the way, any electronic messages you receive from the Tax Office (Berichtenbox) are still also sent by regular mail.
From last year onwards we are requesting a continuous authorisation from the Tax Office for our clients instead of the annual authorizations. This may of course be canceled at any time again. If you receive a letter with a code for this authorisation, please forward it to us so that we can activate this in the system if you are happy with this. This authorisation is required, among other things, to receive copies of tax assessments from the Tax Office in our software program. However, we would still like to receive copies of the paper assessments you receive so that these are checked timely and appeal can be made, if necessary.
If applicable please also provide us with information about your crypto currencies for the tax return 2023. Crypto currencies are part of the assets and it is mandatory to declare this in Box 3. We need the value per 1-1-2023 and 31-12-2023. Even if you have not specified your crypto currency in previous years, it is wise to correct this on your own initiative. The same counts for any other undeclared foreign items. We can assist you in this too. The tax authorities have been authorized themselves to check what cryptocurrencies a tax payer has. This is stated in a new EU directive on data exchange. If it is not possible to view the historic value of your crypto currencies, please ensure you take a screenshot of your portfolio on the 1st of January each year.
With the new tax interest rules, from July 1st 2024 the Tax Office will charge interest on potential tax debts for the 2023 tax return. This interest amounts to 7,5% for the Income Tax and 10% for Corporate Income Tax. If you expect a high tax assessment and you want to avoid paying high interest, please contact us to request a provisional assessment.
If you own any cash money as per 1st of January 2023 that exceeds the threshold of € 596,– (€1.196,– for fiscal partners), it must be declared in box 3. For 2023, this is mentioned in asset category 1, which means it is taxed at the same rate as bank accounts.
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